Global Telecoms Market Outlook: what lies ahead for telecoms operators in the new COVID-19 reality
As the telecoms market continues to get to grips with the impact of the 2020 COVID-19 outbreak, telecoms operators worldwide are increasingly focused on securing existing revenue streams and developing new ones.
Experts seem to disagree on the future of the telecoms industry in general and the BSS segment in particular. GlobalData analysts are confident that the outlook for telcos amidst the new normal of the ongoing coronavirus pandemic remains positive, as both subscribers and businesses, which are moving their workforces to work from home, need to ensure they have reliable connectivity. Analysys Mason, however, expects the 2020 contraction in telecoms revenue to be between 2.5% and almost 6%, not seeing a recovery to 2019 levels until mid-2022.
Global Telecoms Market: Trends and Forecasts
With mobile markets nearing saturation worldwide, subscriber bases have seen little growth in recent years, while developing markets, where mobile penetration rates are relatively low, still provide opportunities for adding new subscribers. Operators in developing markets, encumbered by legacy systems, will find it increasingly difficult to meet the expectations of their growing subscriber numbers. This is likely to drive them to look for new BSS solutions.
Another point to consider is that, dragged down by sluggish subscriber base growth rates in developed markets, the share of mobile internet users is expected to increase by just 12% by 2025 (GSMA. Mobile economy 2020). Hence, data traffic growth rates will not be enough to ensure sustained revenue growth. BSS vendors will need to respond to these new challenges by providing convergent solutions and by enabling operators to experiment with various monetisation models for non-telecoms services.
2019 was a landmark year for 5G. Twenty four markets have seen 5G deployments and 5G smartphones are already on sale, while consumer awareness and expectations have increased. As roughly 80% of operator investment in mobile capex is expected to be related to 5G across most geographic markets, operators will want to get clear answers from BSS vendors about how their platforms can help maximize returns on this investment. With IoT being an integral part of 5G networks, operators see it as an opportunity to earn additional revenue in the face of stagnating revenues weighed down by decelerating growth of subscriber numbers. (GSMA. Mobile economy 2020).
Even though the telecoms market appears to have been most pandemic-proof so far, the inevitable erosion of operator revenues may directly impact investment in BSS and delay the launch of new projects. And yet there are factors that can help quicken the inflow of new investment. Firstly, the industry needs to address the problems, which emerged during the pandemic.
Well aware of the risk a second wave of the coronavirus may bring, operators are analysing potential responses. This will drive them to take steps to optimise their systems or invest in making them less monolithic and more flexible. Analysts predict a rise in investment in virtualization and automation along with more spending on customer engagement, a segment that is expected to help operators sustain their businesses but has been slow to gain momentum in times of social distancing. (Analysys Mason)
COVID-19 Pandemic-induced Changes in BSS Market Dynamics
Most pre-crisis BSS market forecasts were based on a sustained annual growth rate of around 10%. Unlike in 2019 when BSS vendors earned about $13.5 billion, the economic downturn prompted by the coronavirus outbreak is predicted to drag the total market revenue down by 4% to $12.9 billion in 2020. In an optimistic scenario, BSS vendor revenue will not return to the previously forecasted levels until 2024. (Analysis based on Analysys Mason data)
Strategic Markets and the Pandemic
Nexign’s strategic focus is currently on the Middle East, Africa and Latin America. According to Analysys Mason, among the regions targeted by Nexign, Latin America will be hardest hit by the pandemic as a result of dwindling mobile revenues, workforce drain, and a decline in tourist numbers. Yet we at Nexign are sure that local operators will continue looking for new growth opportunities, and new ways of monetising traffic. We look forward to supporting them by offering solutions that will enable them to achieve their business goals, and deliver high-quality services to subscribers.
Analysts believe that the MENA countries, which continue to benefit from considerable government support despite declining revenue from oil sales, have a good chance to recover from the downturn quicker than other regions. In Africa, where basic mobile services are the major contributors to operator revenue, and where the virus spread has been limited thanks to lower population density, the gap between pre-pandemic plans for telecoms system upgrades and actual steps to implement those plans is projected to be insignificant. (Analysys Mason. “COVID-19 scenarios for telecoms operator service revenue: worldwide forecasts 2019-2024”)